Long-term care becomes an important issue as we age. The older we get, the more likely we are to suffer illnesses or disabilities that impede our ability to perform everyday tasks. But affording the care we require can be expensive, especially since health aids charge hundreds of dollars a day, and most nursing homes cost over $80,000 annually. Fortunately, long-term care insurance can make all the difference when it comes to getting the care you need.
What is Long-Term Care Insurance?
There are two main types of long-term care insurance: traditional long-term care insurance and hybrid life and long-term care policies. The former provides assistance with activities of daily living, or ADLs, such as bathing, dressing, and eating. The latter also provides this assistance, but payments come from the policy holder’s death benefit, or money their loved ones would receive after their death. Both types of insurance require premiums, though hybrid policies tend to require the entire premium upfront.
The specific policies of each insurance vary, but generally, they’ll cover assisted living or nursing home care, adult day care services, and in-home care, including handicap accessibility renovations. Those who benefit from long-term care insurance often have a chronic disability, serious illness, or cognitive impairment such as Alzherimer’s disease. However, there are several limitations concerning who can apply and how many services will be covered.
Special Discounts and Benefits
Over 50% of people turning 65 today will need some form of long-term care in the future. Long-term care insurance ensures they’ll be provided for; rather than relying strictly on family caretakers, they’ll be helped by professionals, and they won’t have to worry about dipping into savings.
There are several ways to make long-term care insurance plans more affordable. For instance, some long-term care insurance policies are considered medical expenses, which means they’re tax-deductible. Additionally, spouses can benefit from a “shared care” policy in which they split a premium–this premium costs less than if they each had an individual premium, and it allows them to share benefits. In other words, if one spouse requires more caretaking, they can dip into their partner’s share to cover those expenses.
Employers may offer long-term care insurance plans to their employees; these plans aren’t always less expensive than individual plans, but they do provide for people who would otherwise be ineligible for coverage due to health issues. Similarly, partnership programs allow individuals to apply for Medicaid while protecting assets they’d otherwise need to sell. This means a person can exhaust their long-term care insurance and still receive Medicaid even if they don’t qualify under standard rules.
Limitations and Fees
If an applicant is already sick or above the age of 75, chances are they’ll be denied coverage. This means you have to buy a policy before you actually need it, but knowing your hereditary risks can help determine whether you’ll benefit from one in the future. Another reason to consider purchasing early is because the older you are, the more your premium costs. Women also have higher premiums since, on average, they have longer lifespans. In both cases, older age is viewed as an increased risk, which insurance is hesitant to cover.
The average cost of a long-term care insurance premium is between 2000 and 3000 annually. In the long-run, these premiums are usually less than a prolonged stay at a nursing home; however, long-term care insurance is often limited, and the benefit period only lasts for three to five years. Most people who wind up using their insurance only require a few months of specialized care, so for them, the insurance works to their advantage. In cases where the insuree needs even more care, or never needs care, the coverage won’t be to their benefit.
Most long-term care insurance policies require an “elimination period” before they’ll apply benefits. This period can be as long as 90 days, and you’ll have to pay those costs yourself while you wait. Additionally, not all policies account for inflation when covering future expenses; inflation protection can be added for a fee, and it will ensure your benefits increase as care costs increase.
Are there Other Options for Long-Term Care?
Long-term care insurance isn’t the only option out there, but it is one of the most comprehensive. Medicaid can offer supplementary support, but it only assists those with minimal assets (or those in partnership programs), and not all nursing homes will accept this coverage. Similarly, Medicare requires a three-day hospital stay before it will pay for rehabilitative care, and custodial costs aren’t always included.
Short-term care insurance is another option–it’s cheaper, and more people tend to be eligible, but this policy’s benefits only last a year. In more extreme cases, homeowners have sold their homes or taken out reverse mortgages in order to finance their care. Pensions, social security, and veterans benefits are also available to those who are eligible.
If you think you’ll need long-term care in the future, long-term care insurance is worth looking into. It covers services for those who need help with everyday tasks, and it can save its insurees thousands in costs. However, there are several different plans based on gender, marital status, and age, so it’s worth researching several different policies to find which best fits your needs and provides peace of mind for your future care.